Tuesday, 31 May 2016

On Tuesday
morning, in a milestone in indigenous aircraft development, India’s homegrown
basic trainer aircraft, the Hindustan Turbo Trainer – 40 (HTT-40) could make
its first flight.

Last week,
the HTT-40 completed high-speed taxi trials, in which it accelerated to take
off speed, and even lifted its nose slightly off the runway, checking all its
systems for actual flight. Next, the pilots will go through a full take off and
carry out basic flying manoeuvres before landing the aircraft.

If this
goes off well, it will be a victory for public sector undertaking, Hindustan
Aeronautics Ltd (HAL), which has strongly backed the HTT-40 project, defying a
sceptical Indian Air Force (IAF).

The IAF had
blocked funding for the HTT-40, telling the defence ministry the aircraft would
be too expensive, too heavy and would not meet the air force’s needs. HAL
continued anyway, allocating more than Rs 350 crore of company funds.

The IAF was
backing a Swiss trainer, the Pilatus PC-7 Mark II, importing 75 for Swiss
Francs 557 million (Rs 3,770 crore at current rates), in a controversial deal
signed in May 2012. Those aircraft have already joined the IAF fleet.

But the IAF
needs another 106 basic trainers, and wanted the Swiss aircraft, not the Indian
one. In July 2013, then IAF chief, Air Chief Marshal NAK Browne wrote
personally to then defence minister, AK Antony, requesting the HTT-40 project
be closed and 106 more aircraft be imported from Switzerland. As Business
Standard extensively reported, Browne’s letter to Antony was based on incorrect
figures and procedures were violated to favour Pilatus (July 29, 2013, “Air Force at war with Hindustan Aeronautics;
wants to import, not build, a trainer”, July 29, 2013, “Air Force diluted at least twelve benchmarks
to allow Pilatus into contract” and July 31, 2013 “Admissions, obfuscations in Indian Air Force explanation on Business
Standard reports”).

That was
validated last year, when Business Standard reported a defence ministry
internal noting that concluded Pilatus might not have been the lowest
bidder (February 14, 2015, “Defence
Ministry official questions whether Pilatus was cheapest trainer”).

Since 2015,
indigenization-friendly Defence Minister Manohar
Parrikar has goaded the IAF into accepting the HTT-40 and setting up an “integrated project management team”
to oversee the project. To meet the IAF’s training needs while the
HTT-40 is flight tested and brought into production --- which could take two
years --- 38 more PC-7 Mark II trainers are being bought. The remaining gap of
68 trainers would be filled by the HTT-40.

HAL projects it will build the first two HTT-40
trainers in 2018, eight in 2019, and reach its capacity of 20 per year from
2020 onwards.

HAL hopes to build 200 HTT-40s, exporting a
“weaponised” version to countries like Afghanistan, Myanmar, and some African
customers. HAL chief, T Suvarna Raju told Business Standard the HTT-40 would be
developed into a capable ground attack aircraft, ideal for countries that
cannot afford expensive fighters or air bases with long runways. HAL hopes to
price the HTT-40 at about Rs 40 crore per aircraft, one-fifth the cost of a
basic light fighter.

The HTT-40,
like the PC-7 Mark II, is a propeller-driven, turbo-prop aircraft for “Stage-1”
training of rookie pilots. After 80 hours of basic training, pilots shift to “Stage-2”
training on the HAL-built Kiran Mark II jet trainer. Next comes “Stage-3”
training on the Hawk advanced jet trainer (AJT), which HAL builds under licence
from BAE Systems.

The HTT-40
features a pressurised cockpit, “zero-zero” ejection seats, and a
state-of-the-art cockpit display with “in-flight simulation” that permits an
instructor in the rear cockpit to electronically simulate various system
failures, training the rookie pilot in the front seat in handling emergencies.

HAL says
that 55 of the trainer’s 95 systems have been designed and built in India.
Another 35 systems will be built in India with transferred technology,
including the aircraft’s Honeywell TPE-331-12B engine. This high degree of
indigenisation would make it easy to support the HTT-40 through its service
life.

Friday, 27 May 2016

The defence
ministry’s drive for policy reform has gone into a cul-de-sac of committees and
sub-committees. With cautious ministry bureaucrats reluctant to embrace radical
reform; and with private companies undercutting each other for fear of getting
left out of the inner circle, Defence Minister Manohar Parrikar has convened a
set of independent committees, whose recommendations could provide the cover
needed for root-and-branch reform.

The
committees include one charged with reshaping the basic patterns of defence
spending; another with galvanising defence procurement by restructuring the
ministry’s acquisitions agency; and five sub-committees that evaluate how to
bring in the private sector.

The first committee
--- a 12-member body, headed by Lieutenant General (Retired) DB Shekatkar ---
will recommend measures to “rebalance” defence allocations between revenue and
capital expenditure. With just 25 per cent of the defence budget available for
equipment modernization after 75 per cent goes on running expenses, especially
on a bloated manpower bill, the committee will look at how to cut down manpower
without reducing the military’s combat capability.

Fifteen
years ago, a committee headed by former army vice chief, Lt Gen Chandra
Shekhar, had similarly examined cutting down the army’s logistical and training
establishments, with greater reliance on new civilian infrastructure. Little of
that was implemented. But while the Chandra Shekhar committee scrutinised only
the “non-field force”, the Shekatkar committee will evaluate the sensitive issue
of combat units, including the requirement for a new mountain strike corps that
would add another 50,000 troops to the army.

Parrikar
has come around to the conviction that the army carries too much flab, which
can be trimmed. For example, it is authorised manpower and workshops for
repairing its fleet of jeeps and heavy lorries. With the old purely military vehicle
models replaced by Maruti Gypsies, and Leyland and Tata trucks, greater
reliance could be placed on civilian repair infrastructure that has come up
even in areas like Ladakh, Kashmir and Arunachal Pradesh.

Similarly,
the army carries a large number of transport battalions, which have trucks for
hauling equipment, such as artillery ammunition and fuel, during war. Today
civilian trucks could be requisitioned for mobilisation, since trucking
agencies now operate in areas they never did before.

Signalling
that the ministry is examining the military dimension seriously, the Shekatkar committee
includes several military officers, such as Lt Gen (Retired) Vinod Bhatia, a
former military operations chief who now heads the tri-service think tank, the Centre
for Joint Warfare Studies.

A second
committee has been constituted under former petroleum secretary, Vivek Rae, to study
“the setting up of a Defence Procurement Organisation in the Government of
India.” The committee is required to suggest the functional mandate of the proposed
procurement body, its organisation and staffing, and to suggest how
autonomously it could function.

Vivek Rae,
who served as the defence ministry acquisitions chief, is intimately aware of
the flaws of the current organisation, which numerous commentators have
criticised as hamstrung by caution and procedure, most of them laid down by the
ministry itself, in successive defence procurement procedures (DPP).

The nine-member
Vivek Rae committee also includes a mix of military and civilian officials.
However, it does not incorporate expertise from the private defence industry, a
possible shortcoming, given the increasingly important role of private industry
in meeting India’s equipment requirements.

Says a
private industry CEO, on condition of anonymity: “If a new procurement body is
to make a major difference, it must be charged with developing private defence
industry. Currently, private industry is a step-child of the Department of
Defence Production (DDP), which lavishes its attention on its public sector
units. Procurement is tightly linked with private industry development and with
offsets, and these must come under the new body.”

It is still
unclear whether the defence ministry itself could carry out such major
restructuring, or whether an act of parliament would be needed.

A third
group of sub-committees was constituted on May 24 to salvage the “strategic
partners” (SPs) model for private sector participation in “Make in India”,
which the Dhirendra Singh committee had recommended last year and which was
further given shape by the VK Aatre Task Force early this year.

They had
recommended nominating chosen private sector companies as SPs, to manufacture
defence equipment in India under licence from global vendors. The SPs were to
be selected in ten fields of technology, based on laid down criteria.

However, private
sector companies that were not making the criteria have stalled the selection process,
arguing with some justification that the criteria were arbitrary. This process
has now been revived, but pared down to just five technology areas.

Each of
these five areas --- armoured fighting vehicles; aircraft and helicopters;
submarines; ammunition, including smart ammunition; and “macro process
management of issues”, will be considered by a separate sub-committee. The conclusions
are to be presented to the defence minister by June 4.

Fifteen
years after the private sector was allowed into defence production in 2001,
there is still little clarity about the nature and modalities of participation.
In 2006, the Kelkar Committee made recommendations, which most experts had
regarded as workable and fair. However, the Raksha Udyog Ratna model of private
sector participation it proposed was not implemented.

Meanwhile,
Eight DPPs, the most recent one being DPP-2016 part-released this year, have
failed to galvanise private sector participation. The waters have been further muddied
by a series of proposed procurement models, none of which have satisfied ---
the Indian Designed, Developed and Manufactured (IDDM) procurement category in
DPP-2016; the “Make-1” and “Make-2” categories in the same document; and now
the SP model.

Monday, 23 May 2016

On Thursday, this government will mark its second
anniversary in power. Even before Chief Minister Narendra Modi became Prime
Minister Modi, serving and retired soldiers, sailors and airmen hoped that,
unlike the United Progressive Alliance (UPA), the Bharatiya Janata Party (BJP)
would nurture a long neglected military. How successfully has the National
Democratic Alliance (NDA) government met those expectations?

In electioneering, Mr Modi talked up a muscular,
populist alternative to Manmohan Singh’s widely ridiculed milquetoast image. [In
the 1940s, HT Webster created the comic strip character, Caspar Milquetoast, describing
him as “the man who speaks softly and gets hit with a big stick.”] On September
15, 2013, two days after being anointed the BJP’s prime ministerial candidate,
Mr Modi promised a huge gathering of military veterans in Rewari he would give
the military its due --- both in money and attention. Declared the future PM: “My
friends, the problem is not on the border, the problem is in Delhi… and, thus,
we will have to find its solution also in Delhi! Until we do not have an
efficient and patriotic government in Delhi, it does not matter how capable our
military is, or how modern our equipment.”

In April, just days before voting, Mr Modi released the
BJP’s election manifesto, which included, in unprecedented detail, pledges to
rewrite defence policy, restructure procurement, modernize weaponry, and make
India a defence manufacturing hub. Yet, the soaring expectations of the
generals, admirals and air marshals who were jumping onto the BJP bandwagon
were clearly unrealistic. Reading between the lines, the manifesto clearly
prioritised economic development: “Comprehensive national security is not just
about borders, but in its broad terms includes military security; economic
security; cyber security; energy, food and water and health security; and
social cohesion and harmony. To effectively address the issues of national
security, we need to address the issues of - human resources, science and
technology, system of governance and money.”

Given that, the real decline in defence allocations
should have been expected. From about 1.8 per cent of gross domestic product (GDP)
in the UPA’s last two Budgets, defence allocations declined to 1.73 per cent in
Modi’s first two Budgets; and just 1.65 per cent of GDP this year. To dress this
up, Finance Minister Arun Jaitley changed the basis of calculation this year,
adding into the defence allocations the expenditure on the “pensions” and “defence
ministry” heads, which had never previously been counted as a part of the
defence budget. This is not to suggest subterfuge; pensions and ministry staff
expenditures legitimately belong to the defence budget. But doing that diverted
attention from this year’s reduced allocations and made the defence budget look
fatter. By the previous methodology, this year’s allocations would have been Rs
2,49,099 crore ($37.18 billion). Using the new calculation, defence allocations
rose to Rs 3,40,922 crore ($51 billion). Even so, at 2.26 per cent of GDP, this
remains well short of the recommended allocation of 3 per cent of GDP that
defence planners say is needed over a sustained period to modernise India’s huge
inventories of obsolescent weaponry. Furthermore, even more so than preceding
governments, the NDA is failing to spend its allocations. On March 31, billions
of unspent dollars were returned to the treasury.

In fact, Mr Modi’s money problem is less one of insufficient
allocations than of poor expenditure priorities. Using the new basis of
calculation, three-quarters of this year’s defence budget is for “revenue
expenditure” --- running expenses like salaries, pensions, housing, equipment
maintenance, fuel, training, etc. A mere quarter is for “capital expenditure”,
or modernising the army with new weaponry and kit. Despite India’s cheap
manpower, 55 per cent of the budget goes towards the payroll. This ratio is
being skewed further with the One Rank, One Pension (OROP) scheme bloating the
pension bill, and the 7th Central Pay Commission recommending 15 per
cent salaries rises. Without higher defence allocations, there will be even
less for capital expenditure. Mr Modi seems aware of this conundrum, having warned
his military commanders that growing numbers would adversely affect
modernisation. Yet, there is no decisive move to trim the flab.

Meanwhile, equipment acquisition proceeds randomly. Like
with the UPA government, contracts for new weaponry are pursued not on the
basis of how urgently the item is needed, but in the leisurely order in which
proposals clear the endless obstacle course of ministry procedure. Every
official knows the military’s most critical needs --- artillery and air defence
guns for the army; torpedoes, sonars and air defence missiles for the navy; and
mid-air refuelling aircraft and strike aircraft for the air force, to name a
few. There exists a fast-track procedure for urgent purchases. Even so, glaring
operational voids remain, providing reassurance to our foes.

Similarly, the military’s operational capability
remains hamstrung by the weakness of tri-service operational command and
planning. The defence minister has repeatedly promised to address this issue;
the PM himself told the military’s top commanders on December 15 that: “Jointness at the top is a
need that is long overdue. We also need reforms in senior defence
management... This is an area of priority for me.” Yet, action: zero.

Admittedly, the defence ministry got off the blocks
late, after languishing for almost six months under the additional charge of the
finance minister --- something Mr Modi has never explained. After Manohar
Parrikar’s appointment in mid-November 2014, he has tried to reform the way his
ministry does business. Despite opposition from his conservative bureaucrats, Mr
Parrikar has pushed through badly needed measures to partly level the playing
field between the public and private sectors; and he is popular with private
sector industrialists for his consultative approach. However, he has promised
more than delivered. A new defence procurement procedure (DPP-2016) has been
only partly released. The ministry continues to grapple with an ill-conceived
initiative to replace the public sector monopoly with a private sector one,
dominated by a few “strategic partners”. A pragmatic “blacklisting policy”
remains blocked. Despite Mr Parrikar’s laudable backing of indigenous
development programmes, and the policy prioritisation of “Made in India”
(designing and developing platforms in the country) over “Make in India”
(manufacturing in India to foreign blueprints), few such projects have been
initiated so far. The drive to reform defence policy and revitalize operational
readiness is far from yielding results.

In 2008, the
US Congress passed an innocuously titled legislation --- the “Naval Vessel
Transfer Act” --- that has committed Washington to providing Israel a
“qualitative military edge” over every potential adversary.

That act bound
every US president to ensure Israel always has the “ability to counter and
defeat any credible conventional military threat from any individual state or
possible coalition of states or from non-state actors, while sustaining minimal
damages and casualties.”

Now, in similar
fashion, the US Congress is binding future American presidents, whatever their
alliances or foreign policies, to nurturing US-India defence ties.

On Thursday,
the US House of Representatives passed the “US India Defense Technology and
Partnership Act”, as an amendment to the National Defence Authorization Act
(NDAA) --- which authorizes the US military to spend Budget allocations. Initiated
by Representative George Holding, and supported by most of the House, this
highlights Congress’ dramatic swing towards India and away from Pakistan.

The US Congress
often passes important, but potentially divisive Bills, by tagging them as
amendments to larger, compulsory Bills like the NDAA. A stand-alone Bill would
be extensively debated, allowing potential opponents to oppose them. It is
easier to pass them as an amendment to another less contentious Bill.

The passage
of the Bill has not been without tension. Pro-India lobbies have worked discreetly
to tamp down opposition from Congressmen disappointed with the tardy pace of
India’s defence and economic reforms. There is also ire in Washington about New
Delhi’s continued stonewalling of bilateral “foundational agreements”, even
though American and Indian officials have agreed on the drafts of two --- the
Logistics Exchange Memorandum of Agreement (LEMOA), and the Communications and
Information Security Memorandum of Agreement (CISMOA). Anti-India critics complain
that India has never fought alongside the US, the way allies like the UK and
Australia have.

Even so,
the growing pro-India mood in the House ensured the Bill comfortably passed. Congressional
practice now requires the upper house, the Senate, to pass a similar
“companion” Bill. On May 9, Senators Mark Warner and John Cornyn, introduced
such a Bill, entitled “Advancing U.S.-India Defense Cooperation Act”. Senator
Warner, a democrat; and Senator Cornyn, a republican, co-chair the Senate’s bipartisan,
35-member India Caucus which promotes Washington’s relations with New Delhi.

After the Senate
passes the Warner-Cornyn Bill, as appears likely, the House and Senate versions
of the Bill must be reconciled. This is done either by a formal committee, or
through a series of Amendments in each chamber until the Bill looks the same in
both. This would not be difficult, since the Senate and House versions are
already close to identical. The agreed joint version would then be signed into
US law.

American legislators
are increasingly conscious of the Cold War divergence between India and the US;
and Washington’s continuing support for Pakistan, which makes New Delhi regard the
US as a potentially fickle partner. The new Bill aims at reassuring New Delhi of
American strategic commitment.

Towards
this, the House Bill (just passed) and the Senate Bill (under process) require
the US president to “formalize India’s status as a major partner of the United
States.” It remains unclear what this status would be. New Delhi’s historical
non-alignment rules out a formal treaty, like the North Atlantic Treaty
Alliance (NATO) that binds the US and several European countries into a mutual
defence arrangement. New Delhi might also be hesitant to be designated a “major
non-NATO ally” (MNNA) --- which does not automatically include a mutual defence
pact, but which permits Washington to extend a range of defence and financial
benefits. The US currently has 15 designated MNNAs, including Australia, Japan
and Pakistan. In 2014, Israel was elevated from an MNNA into a higher category
and designated a “major strategic partner”.

For now,
US-India defence ties are covered only by a 2015 executive agreement entitled
“Framework for the US-India Defence Relationship”, which is valid for a decade.
This follows previous, less comprehensive agreements signed in 1995 and 2005.

The new
bill also requires the president to strengthen the Defence Technology and Trade
Initiative, and the India Rapid Reaction Cell --- a Pentagon department that
irons out wrinkles in defence ties.

Wednesday, 18 May 2016

Until
recently, the Indian Air Force (IAF) planned for the possibility of United Arab
Emirates (UAE) supplying up to a squadron of F-16 fighters to boost the
Pakistan Air Force (PAF) in an Indo-Pakistan conflict.

Now,
dramatically signalling the transformed relationship between New Delhi and Abu
Dhabi, an IAF contingent returning to India next month from the on-going Red
Flag exercise in the US will train with the UAE air force. Its pilots fly the
world’s most potent F-16s, the Block 60 version, superior even to US Air Force
F-16s and to the Block 50/52 version that Washington supplies Pakistan.

This and
other aspects of defence cooperation with the UAE and Oman will be on the
agenda of Defence Minister Manohar Parrikar during his four-day visit to those
two countries that begins on May 20.

The UAE is
unlikely to choose defence equipment manufactured in India, the oil-rich
country preferring state-of-the-art western weaponry, like the Block 60 F-16. Even
so, New Delhi hopes to overhaul and upgrade the Hawk trainer jets that both the
UAE and Royal Omani Air Force fly.

The IAF has
the world’s largest Hawk fleet, and Hindustan Aeronautics Ltd (HAL) continues
to manufacture the advanced jet trainer at Bengaluru. In May 2015, HAL and BAE
Systems, the Hawk’s original manufacturer, agreed “to collaborate towards
developing a comprehensive fleet support service for India’s Hawk and Jaguar
aircraft”. HAL hopes to take this forward, becoming the hub that supports
several Hawk fleets in the region.

Another 190
Hawks fly with other Asian and African air forces, including 33 with Australia;
60 with Indonesia; 28 with Malaysia; 20 with South Korea; 24 with South Africa;
12 with Kenya; and 13 with Zimbabwe.

Besides the
Hawk trainer, the UAE and India air force enjoy several other equipment commonalities.
UAE operates 63 Mirage-2000-9 fighters, the most potent version of the IAF’s Mirage
2000. The UAE also flies the Apache AH-64D (28 attack helicopters) and the
Chinook CH-47D (eight heavy lift choppers) that the IAF has contracted to buy
from Boeing. Both air forces operate variants of the C-17 Globemaster III and
the C-130 Hercules transport aircraft.

Growing
defence and counter-terrorism cooperation between India and UAE has been catalysed
by Abu Dhabi’s sharp U-turn from the time PAF pilots trained its air force and
retired PAF technicians maintained its Mirage III and F-16 fighters. This has
been catalysed by the radical threat posed by the Islamic State in Iraq and
Syria (ISIS).

During Prime
Minister Narendra Modi’s visit to UAE last August, the two countries forged a
“comprehensive strategic partnership”. On its heels came the February visit to
New Delhi of the Crown Prince of Abu Dhabi, Sheikh Mohammad bin Zayed al Nahyan,
when “the two renewed their commitment to strengthening the existing
cooperation in training, joint exercises, and participation in defence
exhibitions, as well as in identifying opportunities to cooperate on the
production of defence equipment in India”.

The UAE has
detected and deported terrorist sympathisers from the two million Indians
working in that country, handing them over to Indian authorities. Sheikh al
Nahyan, visiting soon after the terrorist attack on Pathankot Air Base this
year, condemned cross border terrorism.

If the UAE is
a new friend, Oman has long been India’s most steadfast partner in West Asia.
Muscat and New Delhi signed a military protocol in 1972, and the two air forces
together conducted the Exercise Eastern Bridge in 2009 in Oman, and in 2011 in
India. This incorporated the common Jaguar fighter, which both operated until
Oman retired its Jaguars in 2014 and bought the Eurofighter.

Until then,
Jaguar spares built by HAL were sold to Oman. With the IAF looking to extend
the service life of its six Jaguar squadrons by fitting in new engines and
avionics, Oman’s 24 retired Jaguars could be of interest to the IAF.

Oman sent a
naval vessel to participate in the International Fleet Review that the navy
hosted in Visakhapatnam in February. When the Tejas flew the long journey to
Bahrain for its first international outing in the Bahrain International Air Show,
it staged through Muscat, Oman.